Karachi, August 12, 2024 – The Pakistani Rupee experienced a slight decline on Monday, slipping 9 paisas to settle at PKR 278.64 against the US dollar by the close of trading on the interbank foreign exchange market.
This drop from last Friday’s rate of PKR 278.55 highlights the ongoing volatility in Pakistan’s currency exchange landscape.
Currency analysts attributed the rupee’s depreciation to heightened demand for dollars, driven by import needs and corporate payments at the start of the week. Such fluctuations are common at the beginning of the week as businesses adjust their foreign currency positions. Despite this short-term dip, experts remain cautiously optimistic about the rupee’s stability in the near future.
A key factor bolstering this optimism is the recent improvement in Pakistan’s foreign exchange reserves. The State Bank of Pakistan (SBP) reported an increase of $80 million for the week ending August 2, 2024, raising the total reserves to $14.472 billion. This uptick is significant, especially in light of the country’s ongoing economic challenges and anticipated financial aid from international institutions.
Additionally, the SBP’s official reserves saw a modest increase of $51 million, moving from $9.102 billion to $9.153 billion. This small yet notable gain has provided a degree of stability to the currency, contributing to a more positive outlook among market participants.
Another supportive factor for the rupee is the recent reduction in dollar demand for import payments. Government taxation measures have led importers to adopt a more cautious approach, which has alleviated some of the pressure on the rupee. This shift in importer behavior has played a crucial role in mitigating potential downward pressures on the currency.
Furthermore, stronger inflows from export receipts and workers’ remittances have also contributed to the rupee’s resilience. These improved inflows have helped cushion the currency against adverse movements, fostering greater market confidence.
As the week progresses, analysts will be watching closely to see if the rupee can stabilize further. While today’s drop reflects the typical weekly volatility, the underlying economic indicators suggest a potentially more stable outlook in the near term, supported by improved reserves and a more balanced demand for dollars.